How OTTO Group is testing out the transition from selling to renting at scale
One of Europe’s largest international e-commerce retailers, German-based OTTO Group, unveiled a new aspect of its business over the Christmas period, now providing an option where customers can rent a range of products online. Introduced on an experimental basis initially, the rental model has started with a select, but broad range of goods, including TVs, washing machines, tablets, coffee machines, e-bikes and more, all of which will be rented through a new platform – https://www.ottonow.de/. It is ambitious, but is led by sound business fundamentals, which, if successful, could represent a significant demonstration of the benefits of leasing services, rather than selling products, at scale.
While individual renting of goods through suppliers and peer-to-peer sharing have gradually been gaining traction, an established company introducing renting across a diverse spectrum of its products, represents a step forward for the introduction of service-based business models.
The new service, called OTTO NOW, is marketed as a way of accessing otherwise unaffordable large goods, or as a mechanism of staying up-to-date with the latest technologies, but the business motivation likely comes from the promise of economic opportunities like those highlighted in research by the Ellen MacArthur Foundation and McKinsey & Co – Towards the circular economy vols 1-3.
With game consoles available for rent at €14.99 per month, cross-trainers at €10.99 and washing machines for less than €10, there’s a definite cost competitiveness to the one-time sale alternatives, especially considering the price includes free delivery, set-up, repair options and pick-up at the end of the renting period. All of this is delivered with an “as new” guarantee, where products are professionally cleaned, fully functional and any personal data storage is removed and reset to factory defaults.
“The idea of owning and renting products on time has reached a new level in Germany. It is now the right moment to test the willingness of consumers for rental offers”, said Marc Opelt, sales director at OTTO NOW. Transitioning to a more regenerative, circular economy in the global economy’s technical cycles implies a different relationship between businesses and their customers, a parallel transition from consumer to user. With this announcement, OTTO Group are providing a large scale test case of the models that could predominate a prosperous economy in the future.
Source: OTTO NOW – rent instead of buy